Question # 1

A specification of a maximum amount of a foreign produced good that will be allowed to enter the country over a given time period is referred to as a

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Domestic subsidy

Export subsidy

Import quota

Export quota

__________ is a said to exist when the formation of a regional trading group leads to the reduction of trade with nonmember countries infavor of member countries.

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Trade creation

Trade diversion

Trade exclusion

Trade distortion

Import substitution is an example of

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The principle of comparative advantage

The pricnipal of absolute advantage

An outward looking growth strategy

An inward looking growth strategy

The difference between bid rates and ask rates is called the

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Profit

Arbitrage

Spread

Forward transaction

To be considered a good candidate for an export cartel a commodity should.

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Be a manufactured good

Be a primary product

Have a high price elasticity of supply

Have a low price elasticity of demand

Multinational corporations

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Always produce primary goods

Always produce manufactured goods

Products primary goods or manufactured goods

None of the above

The balance of trade can only worsen if income________ relative to absorption

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Increases

Decreases

Adjustment mechanism

Currency contract period

To stabilize the prices of primary products international commodity agreements have utilized all of the following except.

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Tariff -rate quotas applied to imported goods.

Production and export controls.

Buffer stocks

Multilateral contracts

The organization that currently establishes rules of conduct for firms engaging in international trade is the.

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World Bank

International Trade commission

Department of Justice

World Trade Organization

If a small country imposes a tariff on an imported goods terms of trade will

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Improve

worsen

Not change

any of the above

A sudden shift from import tariffs to free trade may induce short term unemployment in.

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Import competing industries

Industries that are only exporters

Industries that sell domestically as well as export

Industries that neither import nor export

The current account includes

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The value of trade in merchandise

Services

Unilateral transfers

All of the above

The NAFTA is a

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Monetary union

Free trade area

Common market

Customs union

The difference between a country's balances of payments and its balance of international indebtedness.

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Is equal of official reserve transactions

Occurs because of foreign exchange fluctuations

Reflects statistical discrepancies

Reflects the difference between flow and stock concepts

Industrial policies intended to foster comparative advantage for domestic industries could result in the implementation of.

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Research and development subsides.

Loan guarantees

Low interest rate loans

All of the above

International trade forces domestic firms to become more completive in terms of.

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The introduction of new products

Product design and quality

Product price

All of the above

When the price of foreign currency the exchange is above the equilibrium level.

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an excess supply of that currency exists in the foreign exchange market.

an excess demand for that currency exists in the foreign exchange market

The supply of foreign exchange shifts outward to the right

the supply of foreign exchange shifts backward to the left

Among the institutions and polices that have been created to support developing countries are.

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the World bank

The international Monetary Fund

The Generalized system of Preferences

All of the above

If the international terms of trade settle at a level that is between each country's opportunity cost.

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There is no basis for gainful trade for either country

Both countries gain from trade

Only one country gains from trade

One country gains and the other country loses from trade

A current account surplus implies that

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The country is a net lender to the rest of the world

The country is running a net capital account surplus

Foreign investment in domestic securities is at very low levels

All of the above

The "balance of trade" is a record of.

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Exports and imports of financial assets

The current account plus capital account

The net export of goods and services

The value of merchandise exports minus imports

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